WU LEUNG KUI JACKY v. LEUNG MING YUN AND OTHERS

CACV 175/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 175 OF 2011

(ON APPEAL FROM DCPI NO. 1154 OF 2008)

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BETWEEN

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JUDGMENT

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Hon Tang VP:

1.  The Plaintiff was employed by the 4^th Defendant as a Direct Sales Representative. Whilst carrying out door to door promotional activities for the 4^th Defendant, he was assaulted by the 1^st Defendant and the 2^nd Defendant who were employed by the 3^rd Defendant. In respect of such assault he had been paid employee's compensation of $473,199.80. In his common law claim against the 1^st to 4^th Defendants, his Revised Statement of Damages totalled $1,397,446.41, for a net sum of $924,246.61 after giving credit for the employee's compensation. His claim against the 1^st and 3^rd Defendants was successful. After a trial which had lasted 6 days, he was awarded damages in the sum of $587,632 which after deduction of $473,199.80 received by way of employee's compensation, resulted in a net award of $114,432.20.

2.  His claim against the 4^th Defendant failed, and he was ordered to pay the 4^th Defendant's costs.  District Judge Mimmie Chan in her judgment of 7 March 2011 made an order nisi that the Plaintiff pay the costs of the 4^th Defendant.  The order nisi was made absolute by her decision on 23 June 2011.

3.  On 1 September 2011, the learned judge gave leave to appeal against the cost order. 

4.  Mr Andy Hung (who appeared for the Plaintiff) put his argument thus.  He said that there were four issues before the trial judge:

"(1) Was the Plaintiff assaulted by D1 and D2?

(2) Does the Plaintiff suffer from mental disorder as a result of the assault?

(3) Was CABLE in breach of its duties to the Plaintiff under their employment contract and/or at common law?

(4) What are the damages recoverable by the Plaintiff?"

5.  The Plaintiff succeeded on the first two issues, and since at trial the 4^th Defendant joined forces with the other defendants and took an active part to challenge the Plaintiff's claim that he had been assaulted, and that if assaulted, whether it had resulted in the Plaintiff's mental disorder, the Plaintiff should only be ordered to pay at most one-eighth of the 4^th Defendant's costs.

6.  Mr Hung relied in particular on the well known principles stated in the case of re Elgindata Ltd (no.2) [1992] 1 WLR 1027 at 1214 A-C that:

"… The principles are these: (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party's costs. Of these principles the first, second and fourth are expressly recognised or provided for by rules 2(4), 3(3) and 10 respectively. The third depends on well established practice. Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which fails ought not to be ordered to pay any part of the unsuccessful party's costs. …"

7.  In addition Mr Hung also relied on Order 62 rule 5, in particular the following:

Rule 5

"(1) The Court in exercising its discretion … shall take into account –

(aa) the underlying objectives set out in Order 1A, rule 1; ……

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful ……

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes –

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue ……;

(d) conduct before, as well as during, the proceedings."

8.  Here the learned District Judge quite rightly did not consider it unreasonable for the 4^th Defendant to have contested any particular allegation or issue, so there was nothing in the conduct of the 4^th Defendant which would have led the court to make an order in favour of the Plaintiff under Order 62 rule 5(1)(e).

9.  However, Mr Andy Hung submitted that the learned Judge had overlooked rule 5(1)(f).  He submitted that the Plaintiff had succeeded on part of his case even though he had not been wholly successful against the 4^th Defendant.  He read the word "case" in para (f) as including issue.  He submitted that because the Plaintiff had succeeded in some of these issues against the 4^th Defendant, the learned judge could have departed from the order that cost should follow the event and deprived the 4^th Defendant of part of his costs.

10.  I do not believe para (f) is meant to cover a case where a Plaintiff has succeeded in some issues although it had failed completely in his claim against a defendant.  Cases such as Summit Property Ltd v Pitmans (A Firm) [2001] EWCA Civ 2020 or Kastor Navigation Co Ltd & Anor v AGF M.A.T & Ors [2003] EWHC 472 (Comm) cited by Mr Hung do not support Mr Hung's reading of para (f).

11.  Indeed, when para 1(f) is read together with paras 1(e) and para (2)(a) and (b), it is obvious that Mr  Hung's submission is wrong. 

12.  Mr Hung also referred us to AEI Rediffusion Music Limited v Phonographic Performance Limited [1999] 1 WLR 1507, 1522H to 1523B where Lord Woolf MR (as he then was) warned that;

"…too robust an application of the 'follow the event principle' encourages litigants to increase the costs of litigation…If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so."

13.  Order 62 rule 5(1)(e) and (2) cover this kind of situation.  In this case, the learned judge was of the view that it was not unreasonable for the 4^th Defendant to contest the Plaintiff's claim that as a result of the assault, he had suffered mental disability.  Indeed, as noted the damages actually recovered by the Plaintiff was substantially lower than as claimed.

14.  This is a case where given the small amount of the Plaintiff's claim as shown in the net award, the Plaintiff had on legal aid incurred substantial costs.  Mr Hung accepted that the 4^th Defendant was sued just in case the 3^rd Defendant should not be able to pay the net award to the Plaintiff.  There is no evidence that the Plaintiff had taken any effort to find out whether there was any real risk that the 3^rd Defendant might not be able to satisfy any judgment which the Plaintiff might recover against it. 

15.  In all the circumstances, I can see no basis upon which to interfere with the learned judge's exercise of discretion.  For these reasons, we have dismissed the appeal with costs.  Legal Aid taxation for the Plaintiff's costs.

Hon Yuen JA:

16.  I agree with the Vice-President's reasons.